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Last Updated: Thursday, 1 September 2005, 16:07 GMT 17:07 UK
Ready-to-drink hopes boost Diageo
Smirnoff mule
The popularity of Smirnoff-based drinks has been waning fast
Shares in Diageo, the world's biggest spirits company, have risen despite a fall in profits.

The drink firm reported that pre-tax earnings before exceptional items for the year to June fell 7.5% to 1.82bn ($3.3bn) on sales of 9bn.

But it told investors the coming year would mark a turnaround with higher demand for ready-to-drink products such as Smirnoff Ice.

Shares in Diageo closed up 13 pence, or 1.6%, at 805p.

The rise, analysts said, was partly down to plans announced to double the amount of shares Diageo buys back from investors to 1.4bn this year, as well as to the fact that the profits - although lower - were in line with expectations.

But the improved forecast was also a major factor, they said.

Sales of ready-to-drink products based on Smirnoff vodka fell 25% in continental Europe and 19% in the UK during the year to June.

Now, though, the slide appears to be bottoming out, the firm said.

"Better pricing and a stabilising ready-to-drink trend may give us the opportunity to improve on the net sales growth we achieved this year," said Paul Walsh, Diageo's chief executive.

The firm expected net sales to rise 4% in the year ahead, Mr Walsh said.


SEE ALSO:
Diageo's European market worsens
07 Jul 05 |  Business
Diageo to buy US winemaking firm
20 Dec 04 |  Business
Diageo says Cheerio to US stake
05 Oct 04 |  Business
Dollar slide hits Diageo revenue
02 Sep 04 |  Business
Diageo attacked over whisky cuts
23 Jul 04 |  Scotland


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